The case of Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp.[1] is an action for declaratory relief filed by a D&O insurer. The Director’s and Officer’s Liability Insurance carrier sued the Federal Deposit Insurance Corporation in its capacity as Receiver of Vantus Bank, and the carrier also sued the bank’s former officers and directors.
The FDIC served the plaintiff D&O carrier with a request for production of the following reinsurance-related materials, in pertinent part:
12. All documents relating to the purchase, placement or ceding of any reinsurance by you that relate to the Policy, including all status reports provided by you to such reinsurance companies and memoranda relating to meetings with reinsurers.
* * *
23. All documents relating to any communications with any reinsurer about the Claims.
The carrier responded to both paragraphs of requested discovery with identically worded blanket objections. The carrier’s blanket objections included the “further objections” that the requested documents are “protected from disclosure by the attorney-client privilege, the work-product doctrine, or any other applicable privileges or protections.”[2]
The United States Magistrate Judge ruling on these objections overruled the blanket attorney-client privilege assertion, with a caveat. First, the Court pointed out without deciding the issue that the FDIC “would have a strong argument” that the insurance company waived attorney-client privilege and work product protections as to any privileged communications the insurer shared with its reinsurer.
The Court further observed that “of course, blanket assertions of privilege are highly disfavored.”
Then the Court attached its caveat to overruling the D&O insurer’s objections to this discovery. Clearly the carrier was going to have to do something other than assert a blanket objection in order to preserve a privilege to bar this discovery: “If Progressive contends that any of the documents addressed by this order are protected by a privilege, it may withhold those documents and describe them in a privilege log.”[3] These are the documents as to which the D&O carrier was required by this Court to state specific privilege objections in a privilege log, if the carrier wants to continue to withhold those documents from discovery in this case:
Progressive will be ordered to supplement its response to document request numbers 12 and 23 to produce the following documents: (1) its communications with its reinsurers regarding the Disputed Provisions [of the insurance contract], (2) its communications with its reinsurers regarding the FDIC–R's claims against the Bank's former officers and directors, (3) its communications with its reinsurers regarding coverage under its standard policy form for claims by the FDIC acting as receiver, and (4) any reinsurance policies that are implicated by FDIC–R's lawsuit against the Bank's officers and directors. If Progressive contends that any of the documents addressed by this order are protected by a privilege, it may withhold those documents and describe them in a privilege log. Progressive shall comply with this order on or before April 21, 2014.[4]
The D&O carrier seems to have caught a break. Its blanket assertions of privilege were not totally overruled by any means. To the contrary, it has been given another opportunity to write out more specific grounds for asserting privileges including the attorney-client privilege, with respect to each such document it wants to continue to withhold.
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